Problem:
A firm has common stock with a market price of $67 per share and an expected dividend of $2.81 per share at the end of the coming year. The dividends paid on the outstanding stock over the past five years are as follows:
Year1 Dividend $2
Y2 $2.14
Y3 $2.29
Y4 $2.45
Y5 $2.62
The cost of the firm's common stock equity is
Explain in detail and also show all work.